Majority of consumers would not switch banks
if their local branch closed; online banking has become the
dominant channel
TORONTO, April 28, 2015 /CNW/ - Canadian bank customers
continue to overwhelmingly trust their primary financial services
provider to securely manage their personal data above other
institutions, including non-traditional banks that have entered, or
are looking to enter, the banking industry as digital disruptors,
according to an Accenture (NYSE: ACN) survey of more than 4,000
retail bank customers in Canada
and the United States.
Accenture's survey, Banking Shaped by the Customer, is the most
recent report in Accenture's multi-year research on the banking
industry. It found that 91 percent of Canadian consumers trust
banks [and other financial institutions] more than other types of
companies with securely managing their data. This includes
payment companies (selected by only 4 percent of Canadian
respondents), mobile phone providers (2 percent) and consumer
technology companies (1 percent). None of the Canadian consumers
surveyed said they trust social media providers the most to manage
their data.
"As online and digital emerges as a driving force in financial
services, it is clear that while Canada's banks possess strong competitive
advantages, there is no room for complacency," said Jodie Wallis, managing director of Accenture's
Banking practice in Canada. "The
survey findings are leading indicators that represent a call to
action for the banking industry to focus more on improving customer
perceptions of their relationship and appealing to millennials with
enhanced digital offerings and loyalty programs."
Even with this competitive advantage that traditional banks have
over non-bank entrants, the Accenture survey identified three
emerging threats in the Canadian marketplace that could entice
consumers to switch providers: (1) the dominance of online banking
and the declining importance of local branches for consumers; (2)
customers' moving away from large national and regional banks; and
(3) the willingness of consumers to shop around for advice-driven
financial products.
Even so, switching rates in Canada are much less than in other mature
global markets, including the United
States. In 2014, only 7 percent of Canadian consumers
switched to a new financial services provider, compared with 11
percent of American consumers. The survey found that
online-only/virtual banks saw the biggest gain from this trend,
with an 18 percent increase in new customers in Canada in 2014, up from 12 percent in
2013.
When it comes to paying for advice-driven products, the survey
found that Canadian consumers are willing to shop around beyond
their primary bank. Nearly two-thirds (64 percent) of Canadian
consumers went to a competitor to purchase auto loans; 38 percent
went to a competitor for brokerage accounts; and 31 percent went to
a competitor when considering registered retirement accounts.
Two-thirds (67 percent) of Canadian consumers went to a competitor
for financial advice and home mortgage loans.
Local Bank Branch Less Important to
Consumers
Accenture's survey found that consumer
relationships with local bank branches are less important as the
demand for digital channels is on the rise. Four out of five
Canadian consumers (82 percent) said they would not switch banks if
their local branch closed. At the same time, almost half (46
percent) of Canadian consumers said they prefer banking online to
banking at branches, compared with 23 percent who prefer banking at
branches. With online becoming the dominant banking channel in
Canada, 37 percent of Canadian
consumers said that online is the most important channel for banks
to invest in over the next five years, followed by branch (17
percent) and mobile (15 percent).
"This is a big change in the evolution of retail banking," said
Wallis. "For the first time in our research, Canadian consumers
ranked online banking services as the number one reason for staying
with their bank, ahead of branch locations and low fees. It is no
longer a question of proximity to the local branch that is driving
consumer choice, but of which banks are offering the strongest
online capabilities and mobile applications."
The Accenture survey also showed that in the next five years,
one-third (31 percent) of Canadian customers expect to use the
branch less frequently or not at all – mostly because they will be
using digital channels more.
The survey found that, as the branch channel fades, 75 percent
of Canadian consumers define their banking relationship as being
transactional or commoditized, rather than being based on value
from advice-based products and services. Further, these consumers
said that their relationship is defined by simple transactions like
paying bills and receiving chequing account statements.
Millennials Switch Banks Twice as Often as Other
Consumers
The North America
survey results found that banks must do more to retain millennials,
defined as consumers aged 18-34 years old.
Though the vast majority of millennials (92 percent) said they
are satisfied with their online banking experience at their primary
bank, they also change banks more often than any other generation.
In the past 12 months, nearly one in five millennials (18 percent)
in the North America survey sample
said they switched from their primary bank, compared with 10
percent of customers aged 35-54 and only 3 percent of people 55 and
older. Though local/community banks were the biggest "winners" of
this trend, 17 percent of millennials who switched chose
digital-only banks. Surprisingly, slightly older consumers were
even more likely to have switched to an online-only bank within the
past 12 months, with 31 percent of consumers aged 35-39 years old
saying they did so.
Millennials in North America
also have distinct preferences for how banking services should be
delivered. Two-thirds (67 percent) said that the traditional and
digital banking experience they receive at their current bank is
only somewhat or not at all seamless, and the same number (47
percent) said they want their bank to provide tools and services to
help them create and monitor their budget. Nearly half (48%) also
said they would like their banks to offer video chat on their
website or mobile/tablet application, compared with only 23 percent
of those over 55.
"As millennials overtake Baby Boomers as the largest living
generation in North America, they
are becoming one of the most influential – and challenging – groups
of customers for the banking industry," said Robert Mulhall, Managing Director and North
America Lead for Accenture Distribution and Marketing Services,
Banking. "Not only are they more likely to switch banks, but
they are also dissatisfied with the experience they're getting at
their existing banks. This poses a significant risk for banks
in the coming years."
"Banking Shaped by the Customer," Accenture's 2015 North America
Consumer Digital Banking Survey Report, is available for download
on Accenture's website.
Methodology
The report is based on an online survey of
4,004 bank customers in North
America conducted for Accenture by Market Knowledge Online
between Jan. 19 and 26, 2015.
Approximately 70 percent of the respondents (2,803) were in
the United States and 30 percent
(1,201) were in Canada. The survey
has a statistical margin of error of 1.55 percent.
About Accenture
Accenture is a global management
consulting, technology services and outsourcing company, with more
than 323,000 people serving clients in more than 120 countries.
Combining unparalleled experience, comprehensive capabilities
across all industries and business functions, and extensive
research on the world's most successful companies, Accenture
collaborates with clients to help them become high-performance
businesses and governments. The company generated net revenues of
US$30.0 billion for the fiscal year
ended Aug. 31, 2014. Its home
page is www.accenture.com.
SOURCE Accenture